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Aussie rally takes a breather, US dollar nurses losses
[SYDNEY] The Australian dollar fell prey to profit-taking early on Monday having posted its best weekly performance in more than four years, while the greenback struggled to get going after a volatile reaction to payrolls data.
The biggest mover so far, the Aussie eased 0.3 per cent to US$0.7420, trimming some of last week's eye-catching 4.4 per cent rally. It had easily outperformed on data showing an unexpected acceleration in the Australian economy, which reduced the chances of further cuts in interest rates this year.
Given the magnitude of its move, the Aussie was always going to find it hard to extend gains in an absence of fresh stimulus.
Not helping, China on Saturday acknowledged it faces a tough battle to keep growing by at least 6.5 per cent over the next five years.
"AUD/USD eased modestly in early thin Asian trading following the weekend commencement of China's National People's Congress (NPC). There have been no major positive surprises from the NPC so far," Commonwealth Bank currency strategist Joseph Capurso wrote in a note to clients, referring to China's 12-day annual national parliament.
The greenback failed to sustain gains sparked by an upbeat nonfarm payrolls report. It initially rose on solid jobs growth of 242,000, but quickly went into reverse as markets appeared to latch onto a disappointing fall in earnings.
The dollar index was steady at 97.318, nursing a 0.3 per cent fall on Friday. It popped above 98.000 in immediate reaction to the employment data, but then slid as deep as 97.019 over the next hour or so.
The broad dollar retreat helped drive the euro back up to the US$1.1000 area, even though the European Central Bank(ECB) is widely expected to ease at its policy meeting on Thursday.
Euro bears are tempering their expectations for bold action, having been disappointed before.
Against the yen, the dollar was flat at 113.85, while the euro fetched 125.12 not far from a two-week peak of 125.585 scaled on Friday.
There is little in terms of major economic data out of Asia, though the People's Bank of China is due to release details of how much it spent defending the yuan in February.
Bank of Japan governor Haruhiko Kuroda is due to speak later in the day.